Monday, April 02, 2012

Will eBooks Loose Their Triple 'A' Status?

If the ongoing DOJ negotiations with the gang of five as expected take away Apple's "most favoured nation" status, which prevents the publishers from selling e-books through rival retailers such as Amazon, Barnes & Noble, Kobo etc for less.

It will almost certainly reduce the ability of publishers to control prices. This will almost certainly lead to a resumption of skirmishes between some parties and reduce market prices.You could say that the market will certainly loose its triple 'A' status (Apple Agency Appeal).

The question of whether we shall see a return to $9.99 ebook pricing is not so important as the one as to what any removal of the status will do to Apple’s commitment to ebooks. Apple are unlikely to dominate the ebook market and like to keep things simple. They are not retailers and playing in an open market is unlikely to be appealing, will be very demanding and not very profitable. The ebook market is very small in Apple’s revenues and is unlikely to grow exponentially with the removal of agency.

We all have to wait for the Justice Department and the EU Commission’s judgement but is looking increasingly like that an agency model will stand as constructed today but the most favoured nation may only consist of one.

1 comment:

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